Junk, But Hardly High Yield

The high-yield bond market is beset by cognitive dissonance. This classic psychological dilemma involves the adherence of two, contradictory beliefs simultaneously, an irrational but utterly human mindset. In that regard, bearishness about speculative-grade debt securities is on the rise but money continues to flow into mutual funds that invest in what was once referred to as junk bonds.

Some $820 million found its way into high-yield mutual funds in the week ended March 6, according to Lipper data, confounding...